World

Comment: Is high inflation a problem of the past?

Ten months of deflationary numbers in 2020 plus the fact that inflation has remained subdued since the 2008 global financial crisis (GFC) may have lulled many people into thinking that inflation is a problem of the past.

Looking back at history, from the early 1970s until the 2008 GFC, “nipping inflation in the bud” has been a key priority for most central banks across the globe.

One may recall that from the early 1970s until the early 1980s, the world economy was hit by a period of high inflation, and fighting inflation became one of the toughest challenges faced by central bankers and policymakers. The global inflation rate in 1974, to put things in perspective, was 13%. The targeted rate for inflation is around 2%. In Malaysia, it was no exception — the inflation rate in 1974 was 17.33%! And in 1981, it was 9.7%, which was still very high by any yardstick.

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